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The news coming out of Brussels this evening is that the EU has offered Spain a rescue package of Euro 100 billion. Spanish daily El Pais reports that the offer was made during a teleconference of European finance ministers. Holland and Finland apparently tried to argue for tough political conditions on the finance. The form of the agreement sets precedents for both the EU and the IMF
in that the accompanying conditions will not impose a new austerity regime.

Spanish economics Minister Luis de Guindos confirmed that Spain would be open to the rescue which he described as in line with what they believe is necessary, stemming from the two bank audits commissioned into the state of Spanish banks (due to report after the Greek elections on June 17th).

The Minister described the finance as providing a "wide margin of safety" which "will not leave the slightest loophole for doubt." It seems likely to come by way of equity stakes in troubled Spanish banks.

Prior to the bailout, speculation focused on the Euro 40 - 80 billion mark, so the figure is much more than expectations. The IMF had put the bailout at Euro 40 billion. Even so there is likely to be speculation that it is not enough and what happens next. Other EU countries brought down by bank debt have had to agree to stinging austerity regimes in return for aid. Bank debt in Ireland is almost wholly responsible for the country's sovereign debt and the country has suffered harsh austerity following the IMF/EU bailout. Early reaction from Ireland was positive about the Spanish news.

It is thought that the IMF will be involved in the financing and monitoring of the deal. El Pais quotes Government sources as saying there will be no IMF macroeconomic program so no austerity measures to go with the financing, despite the likely use of IMF funds.